IRS: Only 802 Declared Bitcoin Holdings

News | March 20, 2017 By:

The Internal Revenue Service has alleged that only a small percentage of bitcoin owners are declaring profits and losses on their tax returns.

Documents filed last week in San Francisco federal court claimed slightly more than 800 returns out of hundreds of millions of tax returns filed in 2015 indicated bitcoin holdings. The papers were filed as part of an ongoing legal battle between the IRS and Coinbase, an exchange that has more than a million customer accounts, including an undetermined number of foreign citizens.

The IRS issued a summons last year requesting Coinbase to turn over information on customer accounts and transaction records. Coinbase refused, claiming the request was overly broad, leading to a federal lawsuit to enforce the summons.

An affidavit from IRS agent David Utzke said in the new filing that he ran a computer analysis of the IRS tax records and determined that few declared bitcoin holdings.

Utzke claimed that his search also indicated that 807 individuals filed bitcoin holdings in 2013 and 893 did so in 2014. The tax filers would use IRS form 8949 to use a property description likely related to bitcoin.

Coinbase indicated in a post that it would continue to battle the IRS. “Coinbase remains concerned with the indiscriminate and over broad scope of the government’s summons and we have produced no records under the summons,” said Coinbase attorney Juan Suarez.

Coinbase has offered to provide its customers with 1099-B forms, which brokerages and other financial services use to help customers report tax information.